Amazon Reaches $25 Billion Chip Run Rate as Alphabet Expects a 2027 TPU Revenue Ramp

Amazon says the annualized revenue pace for its custom-chip business has reached $25 billion, while Alphabet expects meaningful growth in Tensor Processing Unit revenue in 2027 as both companies expand their chip operations.

Amazon's chip-related revenue grew at a triple-digit percentage rate year over year. Commitments for its Graviton and Trainium chips each increased more than 20-fold, and the company plans to offer Trainium to customers outside its own operations.

Alphabet describes strong demand for its TPUs from nearly 100 customers and has announced partnerships with Oracle and Crux AI. It expects TPU revenue to ramp meaningfully in 2027.

The two companies face different trade-offs in how they use their chips. Selling chips directly can bring revenue earlier; using them in cloud services can produce more revenue and free cash flow across a five- to six-year period. Amazon describes its approach to balancing those options as different from Alphabet's.

Both companies still rely heavily on Nvidia GPUs as they build their own chip businesses, a dynamic within the custom-chip competition.